Industry leaders are applauding President Barack Obama’s decision to abandon plans to tighten Bush-era air quality standards for ground-level ozone, a key constituent of urban smog. But the reversal has environmental activists fuming.

On Sept. 2, Obama announced that he directed EPA to drop its controversial effort to set more stringent limits for ozone pollution under the auspices of the Clean Air Act. The President cited the need to reduce regulatory burdens and uncertainty among the business community in light of the struggling economy.

“With that in mind, and after careful consideration, I have requested that [EPA Administrator Lisa P. Jackson] withdraw the draft Ozone National Ambient Air Quality Standards at this time,” Obama said in a statement.

The Clean Air Act requires EPA to review the standards for ground-level ozone once every five years. The standards include a primary benchmark for protecting public health and a secondary guideline aimed at safeguarding the environment.

In 2008, the George W. Bush Administration set both standards at 75 ppb, down from the previous limit of 84 ppb established in 1997. But in January 2010, Jackson proposed tightening the standards to somewhere between 60 and 70 ppb, a range recommended by EPA’s Clean Air Scientific Advisory Committee.

Obama noted that the current ozone regulation is due for review and possible revision again in two years. “Work is already underway to update a 2006 review of the science that will result in the reconsideration of the ozone standard in 2013. Ultimately, I did not support asking state and local governments to begin implementing a new standard that will soon be reconsidered,” the President said.

Business groups had complained that setting stricter ozone standards now would cost billions of dollars and result in more lost jobs. Compliance was estimated by EPA to cost as much as $90 billion annually.

Obama made the right decision, says Andrew N. Liveris, president, chairman, and chief executive officer of Dow Chemical, the nation’s largest chemical manufacturer. “It will have a direct and positive impact on the business community, providing more certainty, and will contribute to economic growth and job creation.”

Calvin M. Dooley, president and chief executive officer of the American Chemistry Council, a trade group representing more than 140 chemical companies, called the President’s action “a win for America’s chemistry industry, for our nation’s economy, and for hardworking men and women across the country.”

The decision, Dooley says, will ensure that communities “that would have essentially been closed for business by the new standard have a fighting chance of attracting new factories, new construction projects, and new energy production.”

But environmental activists charge that the Administration is risking the health of Americans. “The Obama Administration is caving to big polluters at the expense of protecting the air we breathe,” says League of Conservation Voters President Gene Karpinski. “This is a huge win for corporate polluters and huge loss for public health.”

Pointing to EPA’s own data, the Natural Resources Defense Council (NRDC) says a stricter ozone standard of 70 ppb would result in 4,300 fewer premature deaths and 2,200 fewer heart attacks annually by 2020.

“The White House is siding with corporate polluters over the American people,” says NRDC President Frances Beinecke. “The Clean Air Act clearly requires EPA to set protective standards against smog—based on science and the law. The White House now has polluted that process with politics.”